Stock market: Europe set for a mixed start as inflation fears rise amid a rally in crude oil prices
Brent crude remains above $90 a barrel, gas at around 70 euros per MWh
(Il Sole 24 Ore Radiocor) - European stock markets are set to begin September on a mixed note, following on from the performance in Asia, whilst Wall Street closed lower yesterday. EuroStoxx 50 futures are thus down 0.13 per cent, whilst FTSE MIB futures are trading flat (+0.01 per cent). Investor sentiment is being weighed down by renewed tensions in the Middle East, which are pushing up oil prices and reigniting fears of a surge in inflation. Brent crude for November delivery is up 0.45 per cent at $90.9 per barrel, whilst October WTI is trading at $86.32 (+0.65 per cent). Gas prices in Amsterdam also rose slightly to €70 per megawatt-hour (+0.2 per cent). The recent exchange of attacks between Washington and Tehran prompted US President Donald Trump to state that the US would “strike hard”, whilst the Iranian armed forces have warned Middle Eastern countries against allowing the US to use their territory or airspace for attacks against Iran, stating that Tehran will respond with “significantly greater” force to any new aggression. “The renewed hostilities have dashed recent hopes of progress towards the normalisation of maritime traffic through the strait,” commented analysts at Commerzbank Research.
On the macroeconomic front, investors are awaiting today’s European inflation figures, whilst US employment data due at the end of the week will be significant, particularly in light of the inflation concerns expressed by the Fed Chair, Kevin Warsh, at Jackson Hole, which have fuelled the risk of an accelerated rise in interest rates by the Federal Reserve and the ECB. At present, the probability that the US central bank will raise rates at its next meeting in September stands at 66.4 per cent, according to the CME FedWatch tool.
In the foreign exchange market, the euro/dollar exchange rate stands at 1.1607 (down from 1.161 at yesterday’s close), the single currency is also trading at 185.59 yen (from 185.58) and the dollar/yen stands at 159.89 (159.77). In the commodities market, spot gold is little changed at $4,435 an ounce (-0.3 per cent).
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